"Was the Drop Too Severe?"... KOSPI Rebounds Over 2% on Bargain Hunting

“Memory Semiconductor Fundamentals Still Strong”
Bargain Hunting Emerges

On the 21st, employees at the dealing room of Hana Bank headquarters in Jung-gu, Seoul, are monitoring the stock market and exchange rates. On this day, the KOSPI opened at 6553.88, up 0.58% from the previous trading day, but it is showing mixed trends with fluctuations. July 21, 2026 Photo by Jo Yongjun

The KOSPI rebounded for the first time in three days, driven by bargain hunting following a short-term sharp decline. The recent shift by foreign investors from heavy selling to net buying also raised expectations for a market recovery.

KOSPI Up Over 2% on Gains in Semiconductor Stocks

On July 21, the KOSPI opened at 6,553.88, up 0.58% from the previous trading day, and further expanded its gains, trading at 6,677.10 as of 10:13 a.m., up 2.47%. At the same time, the KOSDAQ was trading at 742.77, down 0.92% from the previous session.

While the New York stock market declined overnight due to ongoing tensions between the United States and Iran, the Korean stock market is showing a rebound. The Dow Jones Industrial Average and the Standard & Poor's (S&P) 500 Index dropped by 0.59% and 0.19% respectively, and the Nasdaq Composite Index also fell 0.05%.

The continued U.S. airstrikes on Iran for ten consecutive days have increased downward pressure on the stock market. U.S. President Donald Trump warned that "Iran will pay a heavy price, several times over, for every American soldier killed," signaling possible retaliation. However, bargain hunting in technology stocks such as Nvidia (up 0.23%) and Micron (up 1.94%) led to a rebound in the Philadelphia Semiconductor Index (up 0.60%) after four sessions of decline.

The local market is also attempting a rebound, led by semiconductor stocks. As of 10:05 a.m., Samsung Electronics was trading at 253,500 won, up 3.89% from the previous session, while SK hynix rose 2.38% to 1,806,000 won. Other stocks such as SK Square (up 2.38%), Samsung Electro-Mechanics (up 0.31%), and Hanmi Semiconductor (up 1.13%) are also trending higher.

Experts analyzed that the recent correction in memory semiconductor stocks has been excessive and suggested that now is the time to look for buying opportunities at lower valuations. Global investment bank Morgan Stanley advised that a worsening shortage in memory semiconductors is expected to continue through 2028, and urged investors to view the recent correction as a buying opportunity. On July 20 (local time), Morgan Stanley analyst Joseph Moore said in an investor note, "Buying pressure has been focused on memory stocks, and due to the unusual characteristics of this cycle, a downturn is inevitable," but added, "We view this weakness as an opportunity to buy."

Ji-Young Han, an analyst at Kiwoom Securities, said, "KOSPI's forward price-to-earnings ratio (PER) remains historically undervalued, still below 6 times," and predicted, "As buying interest is spurred by the perception that major sectors, including semiconductors, have declined too steeply, the KOSPI is likely to attempt a rebound."

Foreign Investors' Bargain Hunting Expected

The recent return of foreign investors to net buying after offloading 160 trillion won on the KOSPI this year is also strengthening the case for a market rebound. Since July 8, when the KOSPI fell to the low 7,000 range, foreigners have sharply decreased their net selling. As of 10:16 a.m. on July 21, foreigners were net buyers of around 200 billion won on the KOSPI.

Over the past 8 trading days, from July 8 through the previous session, foreign investors were net buyers on 5 sessions and their total net purchases reached 89.4 billion won, breaking away from the previous unilateral selling pattern. During the same period, individuals and institutions were net sellers of 85 billion won and 6.49 billion won, respectively, pulling the index down.

It is also notable that foreign investors have stopped large-scale net selling of major semiconductor stocks like Samsung Electronics and Samsung Electro-Mechanics. Over the past 8 trading days, foreigners purchased a net 570 billion won worth of Samsung Electronics shares and 350 billion won worth of Samsung Electro-Mechanics shares. However, they still net sold over 1 trillion won worth of SK hynix shares.

This recent bargain buying from foreign investors is thought to have resulted from the excessive drop in the local stock market compared to other countries. Jun-ho Byun, analyst at IBK Investment & Securities, explained, "Foreigners showed an unprecedented strong net selling of 160 trillion won this year on the KOSPI, but as the market declined recently, bargain buying emerged and the selling pressure has weakened." He added, "While this year's selling pressure from foreigners was excessive, it is important to keep in mind that renewed selling pressure could arise if the index rebounds, and to develop appropriate market strategies accordingly."

This content was produced with the assistance of AI translation services.